Is gold losing its sheen?

Easing measure in Europe and liquidity addition from the US pushed US dollar to four month low against Euro, further animating the trend in bullion along with other major riskier asset classes' namely industrial metals, energy alongside global equity markets.

In the Indian markets also gold gained strength during that period and hit fresh life-highs after accounting for depreciation in Indian Rupee in past few quarters.

Gold prices for immediate delivery at MCX touched life high near the Rs 32,500 per 10 gms mark in mid September.

Click NEXT to read more...

Image: A customer tries on a gold necklace at a gold shop in Hanoi.Photographs: Kham/Reuters.

Is gold losing its sheen?

All the above factors are expected to impact the buying sentiment in Q3 as well.

In the current situation, since global economic environment is marred by persistent problems in the EU region and little support is coming from US and Chinese economies, the two most important economies globally; broad demand for the yellow metal seems continuing to remain muted globally.

The same thing can also be checked from the fact that international Spot gold prices are already down more than 5% from the $1800 an ounce levels as seen in early October, currently hovering around the $1700 mark.

Is gold losing its sheen?

Escalation of ongoing debt issues in Greece and Spain is seen pressing the EUR/USD lower and drive traders and investors towards the safety of the US Dollar and US Treasury bills imputing the flavour for gold especially in US Dollar terms.

In that kind of a scenario, Indian prices for most active contract at the MCX are expected to be between Rs 29,500-32,500 per 10 gms.